Farm payment advance

Farmers and crofters still waiting for a direct subsidy payment at the end of March will receive a cash advance from the Scottish Government.

First Minister Nicola Sturgeon has confirmed the Scottish Government will use up to £200 million of national funds to provide cash support while Common Agricultural Policy (CAP) claims are being processed.

Speaking ahead of a meeting with NFU Scotland, the First Minister said:

"The transition to a new, more complex CAP that is affecting payment schedules right across Europe is happening as farmers and crofters are dealing with poor market prices and challenging weather conditions.

"We are less than half way through the payment window allowed by Europe, and the majority of Scottish producers – more than 10,000 – have already received a subsidy payment. However, payments are not being made as quickly as we would like.

"I very much recognise the cash flow issues facing Scottish agriculture, which underpins our £14 billion food and drink industry. That is why the Scottish Government has earmarked up to £200 million of national funds so that any farmer or crofter who has not received an instalment by the end of March receive a nationally-funded payment from the Scottish Government in April."

Rural Affairs Secretary Richard Lochhead has confirmed that today's announcement will also enable Scottish Beef Scheme payments to be made in the middle of April, in line with previous years.

It comes just days after the Cabinet Secretary announced national funds will also be used to ensure hill farmers and crofters in Scotland's most fragile and remote rural areas who rely on Less Favoured Area Support Scheme (LFASS) funding will receive a payment in March as usual.

Mr Lochhead added:

"In Scotland, we are implementing decisions taken with the industry to tailor the policy to deliver better outcomes for Scottish agriculture. I have always been clear that adding this extra complexity would prove extremely challenging to implement, but it is taking longer to make payments than we had hoped.

"Europe's deadline for making direct payments is June 30, and the majority of Scottish farmers and crofters have now received a first instalment worth about 80 per cent of their basic and greening claim.

"We are continuing efforts to speed up progress, such as taking on extra staff, but given the current difficulties facing Scottish agriculture the Scottish Government will use national funds to ensure farmers and crofters will receive support, totalling hundreds of millions of pounds, in the coming weeks."

Notes to editors

As of Monday March 7, 2016, 10,164 first instalments worth about 80 per cent of basic and greening payments had been made, which equates to almost 56 per cent of eligible claims.

Under this nationally-funded Scottish Government scheme any farmers and crofters who have not yet received a first instalment by the end of March will automatically receive a cash advance worth 80 per cent of their CAP claim. Support under this scheme would be offset against the claimant's CAP payment. De minimis state aid rules will apply.

Farmers and crofters who have submitted a basic, greening or LFASS application in 2015 will be sent a letter explaining what we plan to do and what it means for them. There is no need for them to apply but they should read the terms and conditions in the letter carefully when it arrives. Any queries should be directed to the RPID customer helpline on 0300 300 2222.

EU rules expressly prohibit using EU funds to pay out on claims during the December 1 to June 30 payment window until they have been fully processed – and the extreme complexity of the policy in Scotland means it is taking longer than expected to process applications. This nationally-funded scheme and National LFASS Scheme draw on Scottish funds.

Scotland is required by Europe to this year move to a whole new basis for allocating funds based on area of land as well as implementing new greening measures and an overhaul of the rural development programme. In addition, at industry's request, the policy has been further tailored to Scotland's needs, including replacing two Scotland-wide direct income support schemes with six regionalised schemes – a huge administrative task which involves allocating almost half a million fields to one of the three new payment regions.

Other EU administrations, including England, Wales and Northern Ireland, are also making payments later than usual as a result of the new CAP, many of which are implementing reforms far less radical than Scotland's.